Free Trade and Steel...  

Larry Gude

Strung Out
So how would you like to have a job where the work you do has to support the retirement, not the poor output but the retirement, of 4 people plus your own wages?

Tariffs on imported steel are on the way thanks to the President. Some estimates say it will cost each family some $2,500 a year due to cheaper steel we DON’T get due to the tariffs. Think of everything we buy that has steel in it: Appliances, cars, buildings.

Our domestic steel industry is on the book, which is to say owes, retirement benefits to 600,000 people who worked long and hard. People who helped win our wars and helped make the US what we are today in terms of industrial might. There are only some 150,000 people who work in the industry today. It's kind of tough to have a workforce of X and a payroll of X times 4 and still survive.

This is a snapshot of where Social Security is headed, the piper calling to get paid.

So, goodbye tax break and free trade.

If you want something to bitch about, well, how much did Enron cost you personally?

Nothing? More than $2,500 a year?
 

hartline

Member
Larry, I hate to burst your bubble but $2,500.00 per family is more than $250 Billion for the USA. That is more than the whole defense budget under Clinton. Someone is feeding you a bunch of liberial bolonia with a figure that high. $25.00 per family is probably close to the truth.
 
B

Bruzilla

Guest
As a former longtime resident of Pittsburgh, the Steel City, I can tell you that I'm not buying the hype over the tarriffs on steel.  Yes there are a lot of people on the books for retirement benefits from the industry, but the folks who are doing the work today aren't shouldering much of it.  Investments have been made for as long as the USW has been around, and these pension plans carry the load.

As for tarriffs increasing the cost of steel, how much more would it cost us if we had to rely on US-Made steel only?  The USW ran the steel industry in Pittsburgh, and eventually managed to run it right out of town.  By the time tariffs are levied, and pardoned/exempted, and their costs are partially absorbed throughout the supply chain, there won't be much of an impact.  
 

Larry Gude

Strung Out
Bruz,

I was under the impression that the pensions are funded from current revenues.

The problem with tariffs would be if we end up like Detroit in the 70's: Protected, terrible cars. Japan made our domestic industry better as they gained access to the market.

I don't know the issues well at all past the pension deal (which perhaps I am wrong about?) and it seems obvious that if current revenues must provide for 4 times the current actual steel workers then there is no way to be competitive.

Is foreign steel being dumped below costs? If current revenues don’t need to pay for the retirees then is our domestic steel so well done that there is no room for improvement? How can foreign steel be so much cheaper?

What about the county as a whole, via DC, picking up the tab for the retirees? Our debt to these people is beyond mere dollars. (Again, from what I know, their benefits come from current revenues!)

Thanks
 
B

Bruzilla

Guest
Hey Larry,

No... current employees are not supporting these pensions.  They pay for their parts of it, and that money is used, along with employer contributions and interest, to feed money into the plan.  Every one of those pensioned employees have had money invested in their name throughout their employment, and that's the primary provider of their retirement money.

I do not support tariffs as they really only prolong the agony of the US Steel industry as it now exists.  The US risks a great deal of economic damage every time it tries to artificially inflate the costs of products.  The USW and other unions have driven US steel prices up to the point where they are artificially high, and they can't compete with foreign steel.  And while the steel makers would have you believe that these other countries are "dumping" low-cost steel on the market or using sweat shop-style labor, remember that most of this steel is coming from G-7 countries like Japan and Germany, which have well-paid workers.  The problem is our guys are overpaid.

Before big steel left Pittsburgh in the 80's many mill workers were making 30-40k (about 70k in todays $$$$.)  That was a lot of money for semi-skilled labor.  The steel workers and the union were told over and over again that they couldn't keep drawing up labor costs or the industry would be beaten out by foreign competition.  They didn't listen and thousands lost their jobs.  Same deal now.  If you want to compete with the Japanese and Germans, US workers will have to take a pay cut, which is the last thing they want to do.

Unfortunately, GWB is going to need all the union workers he can get in 2004, so he's going to go along with this tariff business.  Fortunately, he's only assigning a tariff that's just big enough to shut up the steel workers and not too big to deter imports.
 

hawkenese

Member
Domestic steel is more expensive, thats right.  But the more imported steel we use, the more we shoot off our own toes.  OK, Bush prompts the tariffs, revaluing imported steel at a higher cost to American steel consumers.  By doing so Bush hopes to keep middle class America working, especially Pennsylavanians and Alabamians, by promoting domestic steel production and domestic consumption. This action may force foreign suppliers to either lower their price or look for other buyers.    Sure, My next batch of steel from the grocery store is going to cost me an extra 27 cents, but it won't be that way for long.  Look at gas prices for crying out loud.
And that remark about domestic cars, well, your right.  Detroit automakers didn't have anyone to make them look bad.  Now they do.
Like bruzilla, I'm all for the tariffs.  
 

hawkenese

Member
Addendum to the last post.  I meant to say I agree with Burzilla about the whole economic damage bit.  Pardon me, but aren't you guys agreeing to disagree?  It does seem your more worried about where pension funds get their proceeds.  neither of you mentioned the possibility of early retirement packages.  Bethlehem steel recently lost a few exec.directors and chairmen to retirement.  But thats only two rich men that retired from just one compnay.  I am sure the overpaid accountants who work with BS will conjure up some hocus pocus to emulate enron's sinister accounting enigma in derivate form, just to cast a sirens call to the guys with bad backs who are thinking about changing career paths or early retirement to pursue their American dream.  Most steel companies are thinking about the possible consequenses of import tariffs.  Especially CPAs.
consider this analogy; our cars depend on gas, which is mostly imported and is taxed both domestically and internationally.  10 years ago the gas price was steady at a buck a gallon.  Yesterday I heard California is up to 2 dollars a gallon.  
Bottom line;  Go to the gas station where you live.  Look at the price.  Now look at the newspaper inside the gas station.  Where's the war?  Now tell me, is free trade worth causing artificial hyperinflation, and damage to the US steel industry? tell you what, Why don't you go and looby for medicare, VA benefit, and Social security budget cuts and bash technical training tax cuts and educational tax-reduction programs?  Dont forget to ask  government contractors for their support.  They won't need steel in ten years anyways.
 

hawkenese

Member
thanks Larry.  Im simply stating that domestically produced steel should be protected from foreign competition despite free trade.  Its not as important as the gas industry, but still important.  If (hypothetically) steel prices were to fluctuate like gas prices due to similar foreign dominance, the moral hazard of a 45 year old steel worker's pension fund becomes the least of my worries.  i dont want to pay 65000 dollars for a brand new ford or chevy.  Not even a domestically produced honda.
 

Larry Gude

Strung Out
So, if I understand you:

You want domestic steel protected

and

Steel workers pensions are a moral hazard

and

You don't want to pay $65,000 for a car, right?
 
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